Stopping a Foreclosure Before it Starts May be Worth the Effort
Nothing destroys credit, humiliates a family, and takes away a homeowner’s dignity quite the way a foreclosure does. If you have missed three or more mortgage payments and you think foreclosure is on the horizon, there are still things you can do to stop it.
Work Out a Compromise
Until your home is actually set for auction, you can still come to an agreement with your lender to allow you to get back on track with your mortgage, such as lowering your payments or extending your term, to stop the foreclosure process. Most lenders would rather do this than take someone’s home away from them.
Deed in Lieu
A deed in lieu of foreclosure allows a homeowner to sign the deed to the home back over to the bank voluntarily. However, most lenders are reluctant to take a home back through a deed in lieu of foreclosure, and would rather allow the foreclosure process to proceed to ensure that a delinquent homeowner’s financial issues are real.
If foreclosure is in your future, you could try to negotiate a forbearance agreement with your lender. In a forbearance agreement, the lender agrees not to foreclose on your property if you agree to stick to a repayment plan that will bring your mortgage current again. But forbearance agreements are not usually long-term solutions, and it will likely be difficult to get a mortgage company to accept one once the foreclosure process has begun. After all, you’re near foreclosure because you didn’t make your mortgage payments, so why should your lender expect you to make them now?
Even if your New Orleans home is scheduled to be auctioned off in a foreclosure sale in the next day or two, you can still stop the sale immediately if you file for bankruptcy protection. Once you file for bankruptcy, a provision known as an automatic stay will prevent your lender from foreclosing on your home, allowing you to buy a little time to explore alternatives to foreclosure.
If you’re just trying to delay foreclosure, a Chapter 7 bankruptcy might be right for you, but if you want to keep your home by restructuring your debt, a Chapter 13 bankruptcy will allow you stop the foreclosure and repay delinquent mortgage payments through an extended repayment plan.
Sell Your Home Before Foreclosure
If you can’t afford your home and just want to get out from under your mortgage and move on, you might want to consider selling your home to avoid a foreclosure.
If your home is worth less than what you owe on it, you could be a short-sale candidate. A short sale will still negatively affect your credit, although not typically to the extent that a foreclosure would. If you can get your lender to accept less than the total amount due on the loan, a short sale might allow you to stop a foreclosure. But beware that in some instances the Internal Revenue Service (IRS) might consider mortgage debt forgiveness as income.
Or, you can sell it for cash and move on with your life. If you want to stop a foreclosure and handle your mortgage issues your way, Big Easy Buyers can help. There’s no easier and faster way to sell your house and avoid foreclosure. Contact us via phone or by filling out a quick form to learn about our 4-step process and how it can help you move forward today.